Qatar’s trade balance registered a surplus in August, and scaled up to $2.4bn from $1.8bn in July, helped by improving oil prices, QNB has said in its latest ‘Qatar monthly monitor’.

The country registered exports worth $5bn and imports at $2.6bn in August.

Exports grew 11% month-on-month (m-o-m) while imports declined by 2.1% m-o-m in August, QNB said.

Exports were likely helped by a stronger Brent crude price of $47.1 a barrel compared to $46.5/b the previous month.

“We expect the merchandise trade surplus to rise further in the second half of 2016 as oil prices recover,” QNB said.

Qatar’s overall balance of payments (BoP) deficit narrowed further in the second quarter of this year (Q2, 2016) to $0.3bn from a deficit of $0.7bn in Q1, 2016.

The improvement in the BoP was driven by stronger inflows on the capital account, which stood at $2.9bn in Q2 compared to $2.4bn in Q1 while the current account remained in deficit, at $2.5bn.

In 2016, QNB expects a current account surplus of 4.1% of GDP before improving to 6.6% in 2017 on the back of an oil price recovery.

Brent crude oil prices climbed by 4.9% in September to end the month at $49 a barrel on the back of ongoing tightening in oil markets.

Qatar’s crude oil production was steady at 677,000 barrels per day (bpd) in July 2016, a marginal increase from 670,000bpd in June.

“We expect Brent crude oil prices to average $45/b in 2016 and $55 in 2017 as the rebalancing of the oil market continues, with strong growth in demand and supply cuts among high-cost producers, particularly in the US and non-OPEC,” QNB said.

According to QNB, Qatar’s international reserves dipped to $36.5bn from $38bn the previous month. Qatar has maintained an average of $36.5bn in reserves in 2016 so far.

In terms of months of import cover, Qatar’s reserves cover 7.2 months, well over the IMF recommended minimum of three months for a fixed-exchange rate regime.

International reserves and months of import cover have both been steady during 2016, despite the weak macro environment, and should rise going forward, QNB said.

Broad money continued its constricting trend, with M2 contracting by 6% year-on-year (y-o-y) in August, from -5.2% y-o-y in July. This is largely owing to a contraction of foreign currency deposits; these fell by 20.2% during the month.

The drawdown in foreign currency deposits may be "fuelled by weaker" hydrocarbon receipts, QNB said.

Interest rates increased last month, suggesting tighter liquidity, QNB said. Overnight interbank rates increased to 0.92% in August from 0.74% in July; the three-month interbank rate rose to 2.5% from 1.25% in August; and the 1-year interbank rate rose by 7 basis points to 1.8%.

Liquidity began to tighten in September 2015; conditions have eased recently but rates are not yet at their historical lows, QNB said.

Bank deposits continue their steady climb in 2016, increasing by 5.8% y-o-y in August.

Private sector deposits make up 53% of bank deposits, while the public sector and non-resident sector make up 26% and 21%.

Private sector deposits grew marginally by 1.2% y-o-y while public sector deposits contracted by 15.4% y-o-y, QNB said.